Godrej Properties - Well poised for growth - ICICI Securities

Along expected lines, Godrej Properties' (GPL) Q3Y21 gross sales bookings worth Rs14.9bn grew 25% YoY and 38% QoQ on the back of three new launches which contributed 56% of the quarter's sales bookings. GPL's 9MFY21 sales bookings have risen by 16% YoY and with 12 new launches lined up in Q4FY21, GPL continues to target an overall YoY growth of 10% in FY21 sales bookings on a FY20 base of Rs59.2bn. With Rs13bn of cash and liquid investments as of Dec-20 and plans for a potential equity/debt fund raise of up to Rs37.5bn, GPL is well positioned to augment its land bank. We retain our SELL Rating with a revised target price of Rs1,019 (earlier) Rs826/share as we assign a higher premium to FY21E NAV of 50% (30% earlier). Key risks to our call are a stronger than expected uptick in GPL's sales volumes and double-digit residential price growth.

- Healthy sales bookings in Q3FY21: In Q3FY21, GPL achieved gross sales bookings worth Rs14.9bn (up 25% YoY and 38% QoQ). This was along expected lines as GPL's three new launches in Pune, NCR and Panvel, MMR during the quarter contributed Rs8.4bn of sales bookings or 56% of the quarter's overall sales. For 9MFY21, GPL's gross sales bookings are up 16% YoY at Rs40.9bn which we believe is commendable considering the Covid impact on the realty industry in this period. GPL's consolidated net debt levels increased by Rs3.4bn QoQ to Rs30.8bn (net D/E of 0.64x) as operating surplus cashflow of Rs4.5bn was negated by land spend of Rs5.2bn and interest/taxes of Rs1.0bn.

- Targeting growth in FY21 sales bookings: With around 12 launches lined up in Q4FY21 (excluding Bandra/Worli projects), GPL is targeting to match or cross its Q4FY20 sales bookings of Rs23.8bn which implies a 10% overall YoY growth in FY21 sales bookings at Rs65.0bn on a FY20 base of Rs59.2bn. Heading into FY22E, the company is targeting sales bookings of at least USD1bn or Rs70-75bn as it has a strong pipeline of launches.

- Potential fund raise on cards to capture growth opportunities: GPL's Board of Directors has approved raising of funds through the equity/debt route of up to Rs37.5bn. As per GPL management, any fresh fund raise is proposed to be utilised as growth capital as the company continues to pursue a counter-cyclical strategy of acquiring land largely on outright basis in a stressed residential market. The company continues to pursue its medium term of capturing double digit market share in its focus markets of MMR, NCR, Bengaluru and Pune over the next 3-4 years. Further, with Rs13bn of cash and liquid investments as of December 2020, GPL is well positioned to augment its land bank at attractive valuations.

Shares of Godrej Properties Ltd was last trading in BSE at Rs.1397.9 as compared to the previous close of Rs. 1341.2. The total number of shares traded during the day was 162907 in over 9627 trades.

The stock hit an intraday high of Rs. 1426.55 and intraday low of 1337.7. The net turnover during the day was Rs. 228266472.

Source : Equity Bulls

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